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Wonga collapse departs Britain’s other lenders that are payday firing line

LONDON (Reuters) – The collapse of Britain’s biggest payday loan provider Wonga probably will turn the heat up on its rivals amid a rise in grievances by clients and telephone telephone calls by some politicians for tighter regulation. Britain’s poster kid of short-term, high-interest loans collapsed into administration on Thursday, just months after increasing 10 million pounds ($13 million) to simply help it deal with a rise in settlement claims.

Wonga stated the rise in claims had been driven loan solo complaints by alleged claims administration organizations, companies which help consumers win settlement from companies. Wonga had been already struggling following a introduction by regulators in 2015 of a limit in the interest it yet others in the market could charge on loans.

Allegiant Finance Services, a claims management business dedicated to payday lending, has seen a rise in company within the previous two months because of news reports about Wonga’s woes that are financial its handling manager, Jemma Marshall, told Reuters.

Wonga claims constitute around 20 per cent of Allegiant’s company today, she stated, including she expects the industry’s attention to make to its competitors after Wonga’s demise.

One of the greatest boons for the claims administration industry happens to be payment that is mis-sold insurance coverage (PPI) – Britain’s costliest banking scandal which has seen British loan providers shell out vast amounts of pounds in payment.

But a limit regarding the charges claims management companies may charge in PPI complaints as well as an approaching 2019 deadline to submit those claims have driven many to shift their focus toward payday loans, Marshall said august. Continue reading